Copper slumps to 6-year low as China PMI weakens demand outlook
Investing.com – Copper prices fell to the lowest level in more than six years on Monday, after a pair of reports on China’s manufacturing sector fueled concerns over a deepening slowdown in the world’s second largest economy.
for September delivery on the Comex division of the New York Mercantile Exchange tumbled to a session low of $2.339 a pound, a level not seen since June 2009, before trading at $2.342 during European morning hours, down 2.2 cents, or 0.95%.
On Friday, copper declined 1.3 cents, or 0.57%, to end at $2.363. Futures dropped 2.0 cents, or 0.76%, last week, the fifth straight weekly loss.
A pair of disappointing manufacturing reports underlined concerns over the health of China’s manufacturing sector.
The for July released on Monday fell to 47.8 from a preliminary reading of 48.2. It was the lowest reading since July 2013.
Meanwhile, the official China’s published on Saturday dipped to 50.0 last month from 50.2 in June, as new orders declined.
Copper traders view Chinese factory activity as an indicator of the nation’s copper demand, as the red metal is widely used by the sector.
Prices of the red metal sank 25.1 cents, or 9.6%, in July, as steep declines on China’s stock market rattled investors’ confidence.
The took investors on another volatile ride on Monday, with shares plunging nearly 2%. The index lost almost 15% in July despite the introduction of government-measures aimed at supporting the market.
Market players are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation’s demand for the industrial metal will decline.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere, for December delivery inched up 70 cents, or 0.06%, to trade at $1,095.80 a troy ounce, while for September delivery shed 4.0 cents, or 0.27% to trade at $14.70 an ounce.
Investors looked ahead to the release of key data later in the session for further indications over the timing of a U.S. rate increase and the strength of the economy.
The Institute of Supply Management was to release data on for July later Monday. Market players are also focusing on Friday’s report.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.34.
The greenback has been well-supported in recent weeks amid speculation the Federal Reserve was on track to raise interest rates in September.
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